The present invention relates to computer systems for automatic control of purchasing, in particular using credit cards.
The typical purchasing system at a large company (e.g., a corporation) can be very complex, with the involvement of a number of employees at different points in the process, and the generation of a large amount of paper. FIG. 1 is a process flow chart illustrating the steps required from start to finish for a typical corporate purchase order. The approval process in a typical company involves a number of corporate controls. A particular purchase for materials or services must be approved for that particular department and also meet budgetary restraints for the particular department. These needs may vary from project to project. In addition, the company may have certain approved vendors which are required to be used for certain purchases.
A purchasing card for government functions has been developed by Rocky Mountain BankCard. The card, which is used like a credit card, can be used to charge purchases. The card user is assigned a card number identifying where in the government hierarchy that employee falls. A budget limit for a department can be applied through the hierarchy to an individual purchase authorization request by the cardholder. The hierarchial system for the Rocky Mountain BankCard which allows different budgetary limits by department can also be used for the billing and reporting purposes. Thus, the government can limit spending by cardholders and receive reports and billings which match the agency's departmental structure.
Another system similar to the Rocky Mountain BankCard system has also been used by Pro Card. Both these systems also incorporate a merchant blocking feature, which prohibits purchases from certain types of merchants. When a card is used, the merchant uses a point-of-sale device to transmit the card number to a central bank for authorization. In addition to the card number, a merchant code (i.e., SIC code) identifying the merchant category is transmitted. The merchant code will identify the type of merchant involved. Thus, for example, it would be possible for the purchasing card holder to be allowed to purchase airline tickets, but not jewelry.
Usage monitoring to detect fraud or fraud patterns is desirable from a bank's perspective. Banks incorporate features in administering a credit card system which allows them to monitor usage. For example, banks can obtain reports showing usage in a particular geographic area, or usage for particular types of merchants, and compare these to the incidents of reported fraud. One useful test is that of "velocity checking." Velocity checking involves determining how often a card is used within a particular time period. Such a check could, for example, uncover fraudulent activity, although this may be hard to distinguish from non-fraudulent cardholder activity.